Better Homes and Gardens Real Estate Life

Tag: Home Buying Tips

  • A Checklist of Steps Leading to the Purchase of a Home

    Having a checklist when purchasing a home can assist you with any concerns you may have about the process and ensure that it goes as smoothly as possible. While it is impossible to guarantee that everything associated with your house purchase will be easy and go smoothly, you can reduce your risk. Here are some important things to consider when creating your home-buying checklist:

    Know What You Want and Can Afford

    The more houses you view, the more you will know what you want. It is important to establish a budget from the start and stay within its criteria. Knowing your criteria of “likes” and “dislikes” before you start the process will help you to avoid wasting time. Narrow down your criteria but do not be afraid to expand your search if you come across the unexpected.

    Be Prepared – and Pre-Approved

    If you want to be taken seriously by the seller and your real estate agent, be prepared. Conduct due diligence on reputable lenders to work with you on purchasing your home. It is important that you get a pre-approval letter from a lender before making an offer. It makes the seller aware that you have the means to buy the house and are a good candidate for the seller.

    Understand the Negotiation Process

    Negotiation is an important component of the process of buying a home and starts after an offer is presented. The seller may counter your offer with a different offer, in that case, it is advised that you work with your real estate agent to reach an agreement. You will still be expected to have a home inspection that may lead you to renegotiate the contract.

    Embrace the Home Inspection

    Embrace the home inspection as a way of discovering any problems the house may need to have addressed. Whether you ask the seller to fix, those problems will be up to you. Many buyers are eager to have problems fixed prior to moving in, providing an opportunity for additional negotiations with the seller.

    Additional Steps Leading Up to the Closing

    Once you are satisfied with the inspection, there are additional steps you will need to add to your home checklist.

    • The Appraisal: An assessment of the market value of the home.
    • Title Company: You will need to work directly with a lender to answer questions and provide documentation requested by the title company.
    • Approval of Mortgage: You will need to get fully approved for your mortgage.
    • The Closing: The closing is the time when the deed is passed on from the seller to the buyer. Most closings take 30 to 45 days from the time you agree on a contract until it is fully closed. When you close is the time to rejoice as it names you the official owner of your home.

    The more you know about the process of buying a home, the more comfortable you will be with that process. The home buying checklist above will help you see where you are throughout the process, and reduce your level of stress.

  • Checking Your Credit Before Buying a Home

    The American dream has always been to own your own home and your Better Homes and Gardens® Real Estate agent is there to help you achieve that goal. A key component is to understand what finance companies look for when considering an application. This knowledge can go a long way towards helping you finally purchase your new home. Finance companies typically look at two very important factors when deciding whether or not to approve a loan application. The first factor is your income to debt ratio and the second is your credit score. If home buying is in your future, checking your credit score now is an essential first step.

    If you are like most people, you most likely have not given your credit score much thought. Now that you are in the home buying market, knowing your credit score is very important. Although there are numerous companies that will provide you with your score for a fee, the federal government has mandated that each consumer is entitled to one free report each year, which includes the three major credit reporting bureaus. Your free report can be accessed at annualcreditreport.com once a year. The report will provide you with your score from Experian, TransUnion and Equifax. Once you have reviewed your report for accuracy, you can challenge any inaccuracies by following the procedures outlined by each of the individual credit reporting agencies. You may also choose to subscribe to one of the many services that offer assistance to keep an eye on your credit score for you to be certain your score remains in the acceptable range as you get closer to the actual home buying process.

    Your credit score will have a direct and significant impact on what type of financing you qualify for, as well as the interest rate you are offered if approved. Individual finance companies set their own guidelines for what is considered an acceptable score; however, an average score of over 600-650 is usually required in order to qualify for conventional financing. The higher your score, the lower your interest rate will be as well. In general, finance companies look for scores over 720-750 to qualify for the lowest interest rates offered by the lender at the time of application.

    Lenders also look at your debt to income ratio. In essence, this means how much debt do you have compared to the income you earn. If you earn $5,000 a month, but your debt is $2500 a month, you have a debt to income ratio of 50 percent which is too high for conventional financing. Check with your potential lenders what debt to income ratio they typically look for.

    If your credit score is not where is should be, you can take some additional time to try and pay off debts and raise your score, or you can look to non-conventional financing. If your scores are in the acceptable range, check with your lender to see if you can get pre-approved which will give you an idea of how much home you can afford and what your monthly payments will be. Be sure you are actually getting pre-approved, not pre-qualified. “Pre-qualified” simply means the lender gives you an idea of what you will qualify for based on information you supply, whereas getting “pre-approved” typically requires you to fill out an official application, pay a fee, and submit to a credit check.  This will ultimately provide a more accurate estimate of what you will be approved for when you decide you purchase your dream home.